# Markup on cigars.



## Leinad (Jan 4, 2010)

I have been kicking around an idea I have for a home based business that would involve the sale of cigars. I am curious if anyone out there knows what the average markup is on quality cigars. Thanks for any info you might have.


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## Esoteric (Jun 15, 2009)

I am not 100% positive about the markup percentage but I think it is fairly significant from distributor to merchant and that is passed onto the customer.

The biggest concern, from what I gather, is not markup or anything of that sort but rather the permit you need and also the taxes. I believe you might need both a state and federal permit (I could be wrong but I am not sure). Also, I know in some places (maybe all), you have to submit monthly reporting to the state concerning what you bought, who you bought it from, value, etc.

I have been told it can be a huge PITA (pain in the ass) but it could be well worth it if it is something you enjoy.

I looked into something like this briefly and decided a drop-ship company would be much, much easier. In that case you do not need a permit, only a business willing to allow you to do a drop ship and a good website.


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## Ironmeden (Feb 24, 2007)

It looks like your from Florida, so i'm not sure how much tax would be on tobacco, but if your like the state i'm in, if you sell out of state you don't have to pay that tobacco tax. You would have to pay that tax upfront, but would get a credit if a cigar is sold out of state. 

i'm sure you could play with the mark up from 50% to 100%

Check out other sites and see what they go for and price accordingly. 

Paul


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## thebayratt (Jun 4, 2009)

I talked to one of my friend's who owns/operates a private smoking room at a B&M. He mentioned that most everything in that particular store was about 100% markup. Some where lower; mostly the yard gars and such.


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## e-man (Jan 5, 2009)

It isn't really a question of how much others mark their product up. Different business models will have different expenses. What price will the market will bare, and how much do YOU need to mark up to make a profit?

Volume is key in wholesale. The more you buy the cheaper it is. I've been to a few small B&M's that sold 5 Vegas and CI Legends, so you know they bought their stock directly from CI/cigarbid, because those are their house brands. Obviously, they couldn't move enough product to get a wholesale price that was less than retail prices from high volume internet companies. In high school, I worked at a souvenir shop, and the owner could by film from K-Mart cheaper than he could get it wholesale from Kodak. 

If you are serious, you need to make a business plan. Figure out what all your costs will be (Rent, storage, shipping, taxes, CPA, lawyer, ZONING, licensing, website, advertising, insurance, compliance, credit card transaction fees, phone, internet, etc). Separate your one-time costs from your recurring costs. Then you need to budget for lost/damaged/stolen/promotional product and customer service related costs. Once you have an idea of your costs, you need to weigh that against the cost of product at specific volumes. 

Now the hard part is deciding if you can take a loss until you get your volumes up, or if you need to turn a profit from day one. How much operating cash will you need up front? Who is your competition and can you survive selling at their prices? If it doesn't make sense on paper, then you should just walk away. 

I don't know if you're planning on getting a loan, but no bank will lend to you if you don't have a business plan AND collateral. Typically, if you don't have 40% of the cash in hand, you'll never see a profit, as most of your revenue will got to pay the bank note.


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## jeepthing (Jul 16, 2009)

I don't know on cigars, but I have worked for 20+ years in the automotive retail business and standard mark up there is 35% to 40%


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## orca99usa (May 23, 2008)

When I worked in a men's big and tall clothing store our retail prices were roughly twice what the store paid for the item. They had a letter code on the price tag that you could decipher to get the store cost if you knew the code.


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## VinCigars (Apr 15, 2010)

e-man said:


> It isn't really a question of how much others mark their product up. Different business models will have different expenses. What price will the market will bare, and how much do YOU need to mark up to make a profit?
> 
> Volume is key in wholesale. The more you buy the cheaper it is. I've been to a few small B&M's that sold 5 Vegas and CI Legends, so you know they bought their stock directly from CI/cigarbid, because those are their house brands. Obviously, they couldn't move enough product to get a wholesale price that was less than retail prices from high volume internet companies. In high school, I worked at a souvenir shop, and the owner could by film from K-Mart cheaper than he could get it wholesale from Kodak.
> 
> ...


Great advise!


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## BDSmith (May 8, 2010)

I found a business plan on Google that stated typical markup was 100%. Not sure how true it was, but I'd believe it.

Maybe it's 100% when priced out as individuals and not quite that at box pricing.


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## ghe-cl (Apr 9, 2005)

I think you will find that it is very difficult, though not impossible, to secure the federal license necessary to buy and sell tobacco. Also, many, if not most, of the top-flight cigar makers are very careful about the retailers they allow to carry their products, often requiring proof of things such as quality humidors and knowledge by the retailer. I think a home-based business would have a tough row to hoe in meeting those standards.


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